Retail inflation expected to rise further: Experts

Source: The Economic Times, Nov 19, 2017

NEW DELHI: Retail inflation, which touched a seven-month high in October, is expected to rise further and cross the 4 per cent mark this month, driven by rise in vegetable and oil prices, experts say.According to global financial services majors like Nomura, BofAML and Morgan Stanley, price pressures are likely to build further in the coming months following a cyclical recovery in the economy and rise in vegetable and oil prices.

“We expect CPI inflation to rise above 4 per cent in November and stay above the RBI’s target of 4 per cent through 2018,” Nomura said in a research note.

Stronger food and fuel inflation pushed up headline CPI inflation in October to a 7-month high of 3.58 per cent.

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Higher food prices accelerate retail inflation in October

Source: The Economic Times, Nov 14, 2017

Consumer inflation touched a seven-month high in October denting hopes of rate cut when the Reserve Bank of India reviews the monetary policy next month. Retail inflation, as measured by the consumer price index (CPI) rose to 3.58% in October from 3.28% in September, data released by the government showed.

“While we expect the RBI’s March 2018 projection to be revised down a notch, but October’s CPI and the likelihood that the 4% target will be tested in the next quarter, reinforces our expectations that the RBI will stay on hold in December and rest of FY18,” said Radhika Rao, economist, DBS Bank.

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Wholesale inflation falls to 2.6% in September

Source: Business Standard, Oct. 17, 2017

New Delhi: The Wholesale Price Index (WPI)-based inflation data released on Monday provided yet another indicator of improving macroeconomic parameters.

Wholesale inflation fell to 2.60 per cent in September from 3.24 per cent in August due to a subdued rate of price rise in food items, particularly vegetables. However, economists warned that data of a few more months would have to be analysed to come to any conclusion on macroeconomic improvement. Read the rest of this entry »


Rural inflation much higher than urban in the last three years

download (6).jpgSource:, Sept 22, 2017

While overall inflation has come down substantially over the past three years, inflation for the rural consumer has been significantly higher than for the urban population. The accompanying chart, which has the point-to-point Consumer Price Index (CPI)-based inflation for the last three years (August 2017 compared to August 2014) has the details.

What is intriguing is that even for farm prices, such as for pulses or for milk and even cereals, consumer prices have risen more in rural India. Prices of health and education services too have moved up faster in rural areas.

With farm incomes being under pressure after two years of bad monsoon, the rise in rural prices could explain the sluggishness in rural demand, as well as the relative robustness of urban demand.

The silver lining is that the latest CPI numbers for August show that rural inflation has been slightly slower in the past one year than urban inflation. This trend needs to continue.



IIP rises only 1.2%, food inflation at 5-month high

Source: Business Standard, Sept. 13, 2017

The data on the Index of Industrial Production (IIP) and consumer price index (CPI)-based inflation, released on Tuesday, were more bad news for the Narendra Modi government, after growth of gross domestic product(GDP) crashed to its lowest in its tenure last week.

The IIP data showed that economic activity was yet to pick up. Food items becoming more expensive and some services turning pricier because of the goods and services tax (GST) meant CPI-based inflation remained high.

In July, the IIP grew by only 1.2 per cent over the same month last year, recovering slightly from a contraction of 0.1 per cent in June. Read the rest of this entry »


August inflation seen at 5-month high on rising food costs

Source:, Sept 11, 2017

Bengaluru: India’s retail inflation is expected to have picked up to a five-month high in August, largely driven by higher food costs, a Reuters poll showed, easing pressure on the Reserve Bank of India (RBI) to cut interest rates again after poor growth data.

Consumer prices were forecast up at 3.20% in August from a year ago, jumping from July’s 2.36%, according to the poll taken on 5-8 September of nearly 40 economists.

Forecasts for the data, scheduled to be released on 12 September at 1200 GMT, ranged from 2.50% to 3.55%. Read the rest of this entry »


Retail inflation to stay well within RBI’s 2-6% target: BofAML

download (2).jpgSource: The Hindu Business Line, Aug 21, 2017

New Delhi: Retail inflation is likely to stay well within the RBI’s 2-6 per cent mandate in the coming months and accordingly, the central bank is expected to cut policy rates by 25 bps on December 6.

According to Bank of America Merrill Lynch (BofAML), inflationary pressures are expected to remain contained by good rains, low growth and subdued imported inflation amid decrease in global commodity prices.The global brokerage firm said that after a pause in the October policy review meet, the Reserve Bank is expected to go for a 25 bps cut in key policy rates in its December 6 meet.

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